Vince Cable Tells Shareholders: Throw Out Bank Cheats

THE GUARDIAN: Bosses preside over 'moral quagmire', says business secretary, as Barclays chief Bob Diamond is summoned to face MPs

Vince Cable has urged shareholders in UK banks to rise up and purge their companies of corrupt executives, who he says have allowed "systemic abuse" to take root in the banking system.

The business secretary, writing in the Observer, says it is now clear that no one at Barclays Capital, the investment bank that triggered the market-rigging scandal, is prepared to take responsibility for endemic corruption, so the ultimate owners of banks must take matters into their own hands.

Describing the problems in UK banking as "a moral quagmire of almost biblical proportions", Cable says the government is taking urgent action, including creating a clearer separation between "casino-style investment banking" and retail banking on the high street. Ministers will this week begin a review into the libor system under which banks lend to each other and Cable hints that US-style criminal sanctions, such as the threat of prison terms, could be considered against those who abuse it.

But he says shareholder power will be crucial. "Regulators are a backstop: they don't own banks," he writes. "The governance at the top of our leading banks has been shown to be lamentably weak. No one at the top of Barclays will take responsibility for systemic abuse.

"Shareholders, the owners, have a major responsibility here. I am bringing in legislation to strengthen their control over pay and bonuses, through binding votes, but shareholders have to get a stronger grip on weak boards and out-of-control executives." » | Toby Helm, Jamie Doward and Jill Treanor | Saturday, June 30, 2012

Bank Shares Plunge up to 40% in an Hour After News of £50bn Banks Deal Was Leaked to the BBC
MAIL Online: Banks 'ask Darling for £50billion cash injection' / Royal Bank of Scotland shares plunge a massive 40% / FTSE rally wiped out as it tumbles back into the red / British savers frozen out by Icelandic internet bank / EU summit to discuss £80,000 savings guarantee

British banking shares plunged today after it was claimed finance chiefs had asked the Chancellor for a £50billion bail-out to stave off further turmoil.

The report by BBC business editor Robert Peston unleashed a fresh day of chaos on the Stock Market, with shares in Royal Bank of Scotland tumbling by 40 per cent at one stage in early trading.

Its value plummeted by a massive £10billion on top of the 20 per cent fall yesterday despite the bank's denial that it had asked the Government for capital at a secret meeting last night.

Lloyds TSB also saw its value drop up to 26 per cent. HBOS fell by 23 per cent and Barclays by 17 per cent as investors panicked at the prospect of household names being part-nationalised and launched a mass sell-off.

After its biggest ever one-day drop in history, the Stock Exchange initially rallied by almost three per cent on the back of a late surge on Wall Street and a huge rates cut in Australia but the turmoil around the banking sector soon dragged it back into the red.

Throughout the morning, it swung between positive and negative territory in an echo of the mixed fortunes of markets in Asia and Australia overnight. Bank Shares Plunge up to 40% in an Hour After News of £50bn Banks Deal Was Leaked to the BBC >>> By Nicola Boden | October 7, 2008

THE TELEGRAPH:
Financial Crisis: Alistair Darling Under Fire over Banking Meltdown: Alistair Darling, the Chancellor, is under fire after the banking crisis intensified as billions were wiped off the value of Britain's high-street banks in minutes. >>> By Robert Winnett, Deputy Political Editor | October 7, 2008

THE TELEGRAPH:
Financial Crisis: Who Is Advising Alistair Darling?: The team helping Alistair Darling to prepare Britain's response to the ongoing financial turmoil.

Geoffrey Spence is one of the central figures in the small team around Mr Darling drawing up plans to help struggling banks.
Mr Spence, was a former senior investment banker at HSBC, Deutsche Bank and Allco Finance Group who joined the Treasury's Council of Economic Advisers in April. He previously helped mastermind the Government's controversial private finance initiative. >>> By Robert Winnett, Deputy Political Editor | October 7, 2008

Watch FT video: RBS Shares Plunge >>> | October 7, 2008
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